Martin Marietta presents look into its 2022 start

Revenues jumped nicely at Martin Marietta in the first quarter this year but profits slipped as inflation impacted business.

Although first-quarter revenues in Martin Marietta’s building materials business jumped 25.7 percent, the company’s gross profit dropped 10.6 percent. Ward Nye, chairman and CEO of Martin Marietta, expects price increases to bolster the business moving forward.

“In the first quarter, Martin Marietta again exceeded world-class safety metrics and achieved record consolidated revenues, which benefited from enterprise-wide pricing gains ahead of April’s more broadly planned increases, organic aggregates and cement shipment growth, and contributions from 2021 acquisitions,” says Nye, whose company reported its first-quarter 2022 results Tuesday. “However, consistent with broader national macroeconomic trends, cost inflation outpaced top-line improvement, reducing our profit margins versus the prior-year quarter.

“Importantly, with the first-quarter nadir behind us, we believe annual price increases, most of which became effective on April 1, the expectation of further widespread pricing actions midyear, and the disciplined execution of our operational excellence initiatives will enable Martin Marietta to mitigate rising costs and drive upstream margin expansion in the second half of the year,” Nye adds. “Based on our current expectations, we are raising our full-year outlook for aggregates and cement pricing to offset inflation and replace the earnings from recently divested downstream businesses.”

Aggregate business

Nye

First-quarter organic aggregate shipments increased 2.5 percent, reflecting what Martin Marietta characterizes as growing public and private product demand at the onset of the construction season. Organic pricing increased 6.5 percent, or 4.6 percent on a mix-adjusted basis.

Including acquired operations, Martin Marietta says total aggregate shipments grew 13.4 percent and pricing increased 5.6 percent.

By segment, total shipments in Martin Marietta’s East Group increased 1.1 percent from infrastructure construction activity in the Southeast and Midwest. Pricing, inclusive of acquisitions, jumped 5.1 percent.

West Group total shipments increased 32.7 percent, Martin Marietta says. Strong underlying demand in Texas and shipments from acquired operations that more than offset Colorado weather-related shipment shortfalls drove the shipment increases. Pricing in the West Group spiked 9 percent, or 4.8 percent on a mix-adjusted basis. According to Martin Marietta, pricing benefited from improving long-haul shipments from higher-priced distribution yards and higher selling prices at acquired operations following Jan. 1 pricing actions.

“We continue to optimize and enhance our aggregates-led portfolio in line with our SOAR (Strategic Operating Analysis & Review) 2025 priorities,” Nye says. “We divested our Colorado and central Texas ready-mixed concrete businesses on April 1. We also recently announced a definitive agreement to sell certain West Coast cement and concrete operations, which is expected to close in the second half of 2022.

“These portfolio optimization actions further reduce our business cyclicality and raw material cost inflation exposure while strengthening our ability to generate consistently higher, sustainable margins over the long term,” Nye adds.

According to Nye, Martin Marietta is well positioned to capitalize on infrastructure tailwinds and strong private demand across its geographic footprint, including strength in single-family housing, warehouses and data centers, as well as a recovery in light nonresidential categories impacted by the pandemic.

“We expect these trends to drive multi-year demand and favorable pricing for our products,” he says. “Beyond the benefits of these attractive industry dynamics, we are confident our strategic decisions will allow for responsible growth of our coast-to-coast footprint, which will benefit Martin Marietta’s bright future. Our team remains steadfastly committed to employee health and safety, commercial and operational excellence, sustainable business practices and the execution of our SOAR 2025 initiatives as we build and maintain the world’s safest, best performing and most durable aggregates-led public company.”